Wednesday, October 19, 2011

Organization Theory - 25 (Decision Making Process)

In the last blog, we asked question related to centralization and concluded with a more comprehensive definition of centralization. In today's blog, we look at centralization more as a decision making process and understand it better - this in fact answers the question of "degree of centralization".

We defined management to be synonymous to decision making early in our blog series. We could look at the process of decision making as represented in the diagram below (more relevant to a larger organization):
This picture is adapted from the T.T Paterson's Management Theory Book 

As shown in the diagram, a decision making process begins with a situation, where a decision needs to be taken. The necessary relevant information is got in relating to the situation, depending on what can be done to influence the situation, this information is interpreted and various advices regarding what is to be done is provided. Finally a choice is made out of these advices which define what is intended to be done. This is then authorized to an individual who would then execute the choice into action.

It is the decision choice that establishes what the decision maker desires or intends to have done. If the decision making has all the different stages shown in the above figure done by the decision maker, it would be highly centralized! If the decision maker comes at the stage of making a choice alone, then it is what we could assume to be highly decentralized decision making.

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